OneAmerica Financial Partners Inc. announced Friday it had agreed to acquire the U.S. defined contribution record-keeping business of BMO Financial Group.
Terms were not disclosed for the deal, which is expected to close during the third quarter. At that time, the combined businesses will operate as OneAmerica Retirement Services LLC.
OneAmerica's record-keeping business has about $30 billion in assets under administration, and the BMO Retirement Services record-keeping business has about $26 billion in assets under administration, William Yoerger, president of the retirement services division for OneAmerica, said in an interview.
OneAmerica has about 11,000 DC plan clients serving 650,000 participants, Mr. Yoerger said. BMO has about 800 clients serving 730,000 participants
According to Pensions & Investments' annual report on DC plan record keepers, OneAmerica had $28.8 billion in record-keeping assets under administration as of Sept. 30, ranking 27th, and BMO Retirement Services, ranked 29th at $27.5 billion.
Because OneAmerica specializes in smaller plans and BMO's business concentrates on midsized to larger plans, the acquisition “allows us to move up a weight class” in providing record-keeping services, Mr. Yoerger said. “We are very familiar with them. It's a great cultural fit.”
Mr. Yoerger said OneAmerica began discussing a deal with BMO in February, adding his company was one of several suitors.
He said the BMO deal is part of OneAmerica's strategy to grow its record-keeping business organically as well as by acquisition. Last year, OneAmerica acquired City National Bank's San Diego-based retirement services business.
A OneAmerica news release said the company “will continue business operations from BMO Retirement Services' current locations, and most clients will continue to work with their current service teams. BMO Retirement Services employees covered by the agreement will become OneAmerica employees.”
Also, in the OneAmerica news release, Barry McInerney, co-CEO of BMO Global Asset Management, said the decision to sell the U.S. retirement services business reflects the company's strategy to focus on money management. “The transaction will not change BMO's role in managing a portion of the investments in the plans moving over to OneAmerica as well as acting as the directed trustee and custodian for those plans,” Mr. McInerney said.